Traditional brick and mortar businesses may become a thing of the past. Today’s modern workplace has embraced the virtual environment. In Managing Innovation by Tidd and Bessant (2009), the authors explained, “virtual organizations are increasingly a feature of the business landscape.” In the article Virtual Organizations, the author noted, “The ultimate goal of the virtual organization is to provide innovative, high-quality products or services instantaneously in response to customer demands.”

Amazon is an excellent example of an organization that has pioneered virtual business. Other successful organizations include: e-Bay, Zappos, and Netflix. There are some businesses that may not initially seem to be virtual organizations. Jet Blue is one of those companies. In an article by Cisco Press titled, Defining the Virtual Business and Its Benefits, the authors explain how Jet Blue reduced inventory through standardization, reduced real estate expenses, and allowed employees to work from home.

In the book The Virtual Organization by Davidow, the author explained that virtual products may exist before it is even produced. “Its concept, design, and manufacture are stored in the minds of cooperating teams, in computers, and in flexible production lines.”

To find out more about virtual organizations’ background, characteristics, challenges, and future potential, check out Virtual Organizations.

With the recent announcement by Warner Bros. that they will use Facebook as a distribution channel, competitors are becoming concerned. Netflix has seen a decline in their stock price (nearly $12/share today alone) and now Sony has made their own move by offering “on select digital movie purchase” features. The BaltimoreSun reported that the Sony films available on Itunes will now allow users to use, “use (1) an “Enhanced Search” that jumps “to exact spots in the movie where [a] keyword appears; (2) a “Clip & Share” function that allows them “to choose among a selection of film clips that can be shared instantly on Facebook and Twitter“; and (3) an ‘Interactive Music Playlist” that connects them “to the exact scene where a song is featured in a film” and to “the iTunes Music Store for easy purchase of soundtrack albums and select songs.”

Facebook is getting a lot of attention for the recent Warner decision. People will now be able to pay for the ability to watch movies using Facebook Credits. These credits had previously been mostly used to pay for games. Bloomberg reported, “Renting a movie through Facebook costs 30 Facebook Credits, or $3. Viewers have 48 hours to watch the films.” For more information about how to purchase Facebook Credits click here.

Those interested in immediate gratification have made Netflix a popular choice for movie viewing. Amazon has now taken on the challenge of competing with Netflix. Amazon’s “Prime” subscription program costs $79/year which includes their 2-day shipping on purchases. Prime also includes more than 5,000 video-streaming movies and television shows. Most of what they offer includes older television seasons and movies.

Netflix’s “Watch Instantly” program costs $7.99 a month and video-streams over 20,000 titles. This brings their price to over $95/year. Many of their movies are newer, but their TV shows consistent of previous seasons.

Amazon is entering this market in hope of increasing their digital business. According to the Wall Street Journal, “The streaming-video offering could lead customers to buy or rent the 90,000 movies and shows that Amazon already offers on an a la carte basis.”

In an effort to compete, Netflix has entered into a two-year deal with CBS to provide television shows. WSJ reported, “Netflix will pay CBS hundreds of millions of dollars over the course of the nonexclusive, two-year licensing pact, which gives CBS the option to extend it for up to two years and add more content in return for higher compensation.”

How will this affect the cable and satellite industry’s relationship with TV networks? That is something that TV executives must consider as more than $30 billion a year comes to networks from subscriptions.

Netflix is no stranger to competition. Netflix’s competition with Itunes, led to their removing limits for streaming of video. PCworld reported, “Previously the amount of streaming content subscribers could access was dependent on their subscription level. For example, the $16.99 membership allowed for 17 hours of streaming movie content. With the new unlimited plan, all subscription levels, with the exception of the lowest $4.99 plan, will be able to stream as many Netflix movies and TV shows as they’d like to their PCs.”

Itunes has been tough to beat in movie downloads. As Forbes pointed out, “ITunes already dominates the world of movie downloads. In 2010 the service accounted for 64.5% of all movie downloads and rentals.”